Monday, October 19, 2009

Speed vs. Agility

A recent product announcement by IBM and a series of excellent (or at least interesting) articles in Sloan Management Review have set me to musing on one unexamined assumption in most assessments: that increased process speed equals increased business agility. My initial take: this is true in most cases, but not in all, and can be misleading as a cookie-cutter strategy.

The IBM announcement centered around integration of their business-process management (BPM) capabilities, in order to achieve agility by speeding up business processes. What was notably missing was integration with IBM’s capabilities for New Product Development (NPD) – Rational and the like. However, my initial definition and application of KAIs (key agility indicators) at a business level suggests that speeding up NPD, including development of new business processes, has far more of an impact on long-term business agility than speeding up existing processes. To put it another way, increasing the Titanic’s ability to turn sharply is far more likely to avert disaster than increasing its top speed charging straight ahead – in fact, increasing its speed makes it more likely to crash into an iceberg.

A similar assumption seems to have been made in SMR’s latest issue, in the article entitled “Which Innovation Efforts Will Pay?” The message of this article appears to be that improving innovation efforts is primarily a matter of focusing more on the “healthy innovation” middle region of internally-developed modest “base hits”, with little or no effect from speeding up internal innovation processes or expanding them to include outside innovation. By contrast, the article “Does IP Strategy Have to Cripple Open Innovation?” suggests that collaborative strategies across organizational lines focused on NPD make users far more agile and businesses far better off, despite requiring as much (or more) time to implement as in-house efforts. And finally, we might cite a study in SMR suggesting that users estimating inventory-refill needs were more likely to make sub-optimal decisions when fed data daily than when fed a weekly summary, or the recent book on system dynamics by Donella Meadows that argued that increasing the speed of a process was often accomplished by increasing its rigidity (constraining the process in order to optimize the typical case right now), which made future disasters, as the system inevitably grows, less avoidable and more life-threatening.

All of this suggests that (a) people are assuming that increased process speed automatically translates to increased business agility, and (b) on the contrary, in many cases it translates to insignificant improvements or significant decreases in agility. But how do we tell when speed equals agility, and when not? What rules of thumb are there to tell us when increased speed does not positively impact business agility, and, in those cases, what should we do?

I don’t pretend to have the final answers for these questions. But I do have some initial thoughts on typical situations that lead to increased speed but decreased agility, and on how to assess and improve business investment strategies in those cases.

If it isn’t sustainable it isn’t agile. Let us suppose that we improve a business process by applying technology that speeds the process by decreasing the need for human resources. Further, suppose that the technology involves increased carbon or energy use – a 1/1 replacement of people-hours by computing power, say. Over the long run, this increased energy use will need to be dealt with, adding costs for future business-process redesign and decreasing the money available for future innovation. The obvious rejoinder is that cost savings will fund those future costs; except that today, most organizations are still digging themselves deeper into an energy hole, while operational IT costs, driven by an increased need for storage, continue to exert upward pressure and crowd out new-app development.

As the most recent SMR issue notes, the way to handle this problem is to build sustainability into every business process. If lack of sustainability decreases agility, then the converse is also true: building sustainability into the company, including both ongoing processes and NPD, increases revenues, decreases costs – and increases agility.

If it’s less open it’s less agile. In some ways, this is a tautology: if an organization changes a business process so as to preclude some key inputs in the name of speed, it will be less successful in identifying problems that call for adaptation. However, it does get at one of the subtler causes of organizational rigidity: the need to do something, anything, quickly in order to survive. A new online banking feature may make check processing much more rapid, but if customers are not listened to adequately, it may be rejected in the marketplace, or cost the business market share.

Detecting and correcting this type of problem is hard, because organizational politics points everyone to the lesson only after the process has already been implemented and has gained a toehold – and because businesses may draw the wrong conclusion (e.g., it’s about better design, not about ensuring open collaboration). The best fix is probably a strong, consistent, from-the-top emphasis on collaboration, agile processes, and not shooting the messenger.

Those are the main ways I have seen in which increased speed can actually make things worse. I want to add one more suggestion, which affects not so much situations where speed has negative consequences, but rather cases in which speed and agility can be improved more cost-effectively:upgrading the development process is better. That is, even if you are redesigning an existing business process like disaster recovery for better speed, you get a better long-term bang for your buck by also improving the agility of the process by which you create and implement the speedier solution. Not only does this have an immediate impact in making the solution itself more agile; it also bleeds over into the next project to improve a business process, or a product or service. And the best way I’ve found so far to improve development-process speed, quality, and effectiveness is an agile process.

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Wayne Kernochan

About Me

Presently President, Infostructure Associates, Wellesley, MA. Long-time computer industry analyst at firms like Aberdeen Group and Yankee Group, and before that a programmer at Prime Computer and Computer Corp. of America. Sloan/MIT MBA, Cornell Computer Science Master's, and Harvard college degrees. Used to play the violin, and wrote a book (unpublished) about personal finance.